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The following financial information is given. Year 1 Year 2 Book value of assets $18,000 $26,000 Market value of equity 18,000 60,000 12 months ended

The following financial information is given. Year 1 Year 2 Book value of assets $18,000 $26,000 Market value of equity 18,000 60,000 12 months ended Year 1 12 months ended Year 2 Sales $1,000 $1,300 Cost of goods sold 500 700 Operating income 500 600 Depreciation expense 200 200 Interest expense 100 100 Pretax income 200 300 Income tax expense 80 120 Net income $ 120 $ 180.


Using a common-size income statement, did operating income and net income increase or decrease? 

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